Aluminum Prices Plummet After US-Iran Framework Deal
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 hour ago
0mins
Source: seekingalpha
- Aluminum Price Drop: Aluminum prices in London fell to a two-month low on Monday, with benchmark three-month aluminum futures dropping over 3% to $3,426 per metric ton, reflecting heightened market concerns over supply disruptions.
- Supply Chain Recovery: The US-Iran framework deal is expected to restore metal shipments through the Strait of Hormuz, alleviating supply disruptions in the Persian Gulf, although the Middle East still accounts for about 9% of global aluminum output.
- Production Decline: Gulf producers experienced a 35% year-over-year drop in aluminum output in April due to significant damage to infrastructure from Iranian attacks, further exacerbating supply tensions in the market.
- Market Reaction: While aluminum prices fell, other metals like copper and tin rose, indicating concerns over the strong correlation between aluminum and energy prices, with analysts noting that the market still faces a significant supply gap.
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Analyst Views on AA
Wall Street analysts forecast AA stock price to fall
8 Analyst Rating
2 Buy
4 Hold
2 Sell
Hold
Current: 68.770
Low
38.00
Averages
57.63
High
78.00
Current: 68.770
Low
38.00
Averages
57.63
High
78.00
About AA
Alcoa Corporation is a vertically integrated aluminum company comprised of bauxite mining, alumina refining, aluminum production (smelting and casting), and energy generation. The Company's operations are comprised of two business segments: Alumina and Aluminum. The Alumina segment primarily consists of its bauxite mines and alumina refineries, and its operations include the mining of bauxite and other aluminous ores, as well as the refining, production, and sale of smelter grade and non-metallurgical alumina. The alumina produced by this segment is sold primarily to internal and external aluminum smelter customers; a portion of the alumina is sold to external customers who process it into industrial chemical products. The Aluminum segment consists of the Company's aluminum smelting and casting operations along with the Company's energy production assets in Brazil, Canada, and the United States. It has direct and indirect ownership of over 25 operating locations across eight countries.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- New Labor Agreement Effective: Alcoa Corporation has ratified a new labor agreement with the United Steelworkers covering approximately 965 employees, effective from May 16, 2023, to May 15, 2030, ensuring stable operations at its smelters in Indiana and New York.
- Employee Protections Enhanced: The agreement reflects the company's commitment to employee rights, aiming to improve working conditions and protections, thereby enhancing employee satisfaction and productivity, which is crucial for overall operational efficiency.
- Stock Price Volatility Impact: Despite the positive development of the new agreement, Alcoa's shares are trading at $65.02, down 5.45% on the New York Stock Exchange, indicating market concerns regarding the company's future outlook.
- Commitment to Community and Customers: Alcoa emphasizes its focus on maintaining safe and reliable operations while serving customers and communities, highlighting the company's strategic positioning in upholding social responsibility.
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Alcoa Ratifies New Labor Agreement with USW
- Agreement Overview: Alcoa has ratified a new labor agreement with the United Steelworkers (USW) that covers approximately 965 employees at Warrick Operations in Indiana and Massena Operations in New York, effective from May 16, 2026, to May 15, 2030.
- Voting Outcome: The agreement was ratified by a wide margin, indicating strong support from union members and reflecting a positive relationship between the company and the union, which is crucial for future collaboration and stability.
- Operational Commitment: Alcoa emphasizes its focus on maintaining safe and reliable operations while serving customers and communities, ensuring production efficiency and employee satisfaction throughout the agreement's duration.
- Company Vision: Alcoa aims to drive safety, efficiency, and sustainability through innovation and best practices, with a vision to build a legacy of excellence for future generations, further solidifying its global leadership in the aluminum industry.
See More
Aluminum Prices Plummet After US-Iran Framework Deal
- Aluminum Price Drop: Aluminum prices in London fell to a two-month low on Monday, with benchmark three-month aluminum futures dropping over 3% to $3,426 per metric ton, reflecting heightened market concerns over supply disruptions.
- Supply Chain Recovery: The US-Iran framework deal is expected to restore metal shipments through the Strait of Hormuz, alleviating supply disruptions in the Persian Gulf, although the Middle East still accounts for about 9% of global aluminum output.
- Production Decline: Gulf producers experienced a 35% year-over-year drop in aluminum output in April due to significant damage to infrastructure from Iranian attacks, further exacerbating supply tensions in the market.
- Market Reaction: While aluminum prices fell, other metals like copper and tin rose, indicating concerns over the strong correlation between aluminum and energy prices, with analysts noting that the market still faces a significant supply gap.
See More
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- Rising Cost Factors: The loss is primarily attributed to $30 million in higher production costs at the Pinjarra refinery due to Cyclone Narelle's impact, along with $20 million in increased fuel oil and diesel prices linked to the Middle East conflict, reflecting the direct impact of external conditions on operations.
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- Supply Chain Vulnerability: Alcoa's alumina refineries typically ship raw materials to aluminum smelters in the Persian Gulf, but surging fuel and electricity prices due to the conflict have significantly increased operational costs, further exacerbating the company's competitive disadvantage in the global market.
See More
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- New Labor Agreement Effective: Alcoa Corporation has ratified a new labor agreement with the United Steelworkers covering approximately 965 employees, effective from May 16, 2023, to May 15, 2030, ensuring stable operations at its smelters in Indiana and New York.
- Employee Protections Enhanced: The agreement reflects the company's commitment to employee rights, aiming to improve working conditions and protections, thereby enhancing employee satisfaction and productivity, which is crucial for overall operational efficiency.
- Stock Price Volatility Impact: Despite the positive development of the new agreement, Alcoa's shares are trading at $65.02, down 5.45% on the New York Stock Exchange, indicating market concerns regarding the company's future outlook.
- Commitment to Community and Customers: Alcoa emphasizes its focus on maintaining safe and reliable operations while serving customers and communities, highlighting the company's strategic positioning in upholding social responsibility.
See More
Alcoa Ratifies New Labor Agreement with USW
- Agreement Overview: Alcoa has ratified a new labor agreement with the United Steelworkers (USW) that covers approximately 965 employees at Warrick Operations in Indiana and Massena Operations in New York, effective from May 16, 2026, to May 15, 2030.
- Voting Outcome: The agreement was ratified by a wide margin, indicating strong support from union members and reflecting a positive relationship between the company and the union, which is crucial for future collaboration and stability.
- Operational Commitment: Alcoa emphasizes its focus on maintaining safe and reliable operations while serving customers and communities, ensuring production efficiency and employee satisfaction throughout the agreement's duration.
- Company Vision: Alcoa aims to drive safety, efficiency, and sustainability through innovation and best practices, with a vision to build a legacy of excellence for future generations, further solidifying its global leadership in the aluminum industry.
See More
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- Aluminum Price Drop: Aluminum prices in London fell to a two-month low on Monday, with benchmark three-month aluminum futures dropping over 3% to $3,426 per metric ton, reflecting heightened market concerns over supply disruptions.
- Supply Chain Recovery: The US-Iran framework deal is expected to restore metal shipments through the Strait of Hormuz, alleviating supply disruptions in the Persian Gulf, although the Middle East still accounts for about 9% of global aluminum output.
- Production Decline: Gulf producers experienced a 35% year-over-year drop in aluminum output in April due to significant damage to infrastructure from Iranian attacks, further exacerbating supply tensions in the market.
- Market Reaction: While aluminum prices fell, other metals like copper and tin rose, indicating concerns over the strong correlation between aluminum and energy prices, with analysts noting that the market still faces a significant supply gap.
See More
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- Viasat Contract Approval: Viasat's shares surged over 8% following the U.S. Space Force's award of a multi-year contract for a dual-band satellite system, which is expected to enhance the company's market position in military communications.
- EchoStar Stock Rise: EchoStar's shares gained more than 8% ahead of SpaceX's IPO on Friday, reflecting market optimism regarding its stake in SpaceX shares and potential future gains.
- General Dynamics Upgrade: General Dynamics saw its shares increase nearly 5% after Jefferies upgraded its rating to buy, citing significant returns on investments and continued strength in near-term results, with a new price target of $400 implying a 17% upside.
- Adobe Stock Decline: Adobe's shares fell nearly 5%, hitting a new 52-week low, despite analysts expecting its earnings report to align with prior guidance, indicating ongoing market concerns about its future performance.
See More
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- Chip Equipment Stocks Rise: Oracle's increased capital expenditure plans positively impacted chip equipment stocks, with Applied Materials and Lam Research both climbing nearly 5%, KLA rising 4%, and ASML Holding gaining over 3%.
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See More
Alcoa Faces Major Pressure in Alumina Segment Amid Energy Disruptions
- Alumina Segment Loss: Alcoa expects its alumina segment to incur a $60 million hit in Q2 due to energy disruptions, with CFO Molly Beerman stating that the segment will be underwater, highlighting the company's vulnerability in the current market environment.
- Rising Cost Factors: The loss is primarily attributed to $30 million in higher production costs at the Pinjarra refinery due to Cyclone Narelle's impact, along with $20 million in increased fuel oil and diesel prices linked to the Middle East conflict, reflecting the direct impact of external conditions on operations.
- Market Dependency: The alumina segment contributed nearly half of Alcoa's adjusted EBITDA in FY 2025, yet the soaring aluminum prices have placed dual pressure on profitability, especially as global alumina supply chains are affected by geopolitical risks.
- Supply Chain Vulnerability: Alcoa's alumina refineries typically ship raw materials to aluminum smelters in the Persian Gulf, but surging fuel and electricity prices due to the conflict have significantly increased operational costs, further exacerbating the company's competitive disadvantage in the global market.
See More
